FG to float eurobond to raise $2.5 billion capital
The Debt Management Office (DMO) on Thursday, said the Federal Government would float fresh eurobond to raise $2.5 billion before the end of 2017.
Director General of DMO, Patience Oniha, who made this known at the 2017 Nigerian Debt Capital Markets Conference and Awards, organised by the FMDQ OTC Securities Exchange in Lagos said the borrowing would enable the country to bridge the gap in the 2017 budget currently facing liquidity problem to finance some capital projects.
She said the proposed eurobond issuance would complement the $1.5 billion raised from the international market in March 2017.
Ms. Oniha said the nation’s treasury bills portfolio presently stands at ₦3.7 trillion, but that DMO plans to refinance it with foreign borrowing to reduce pressure on the domestic market.
She said that Nigeria needed to build stronger and responsive institutions that could support infrastructure agenda of the government, which had proposed to channel new borrowings into the capital investments instead of consumption.
“The debt ratio is not tangible and adequate components of borrowing because it is not going into funding others than capital investment. Let us channel new borrowings into capital investment instead of consumption,” she said.
On the ₦100 billion Sukuk bond, the DG said that the Federal Government had identified 25 road projects to be funded with the proceeds. She said that among the roads listed are Ore-Sagamu Road, Kaduna Bypass, Enugu-Port-Harcourt Road, Kano-Maiduguri and Benin-Lokoja Road, among others.
According to her, government has also decided to finance other trunk A roads, which will provide the needed support to accelerate the nation’s developmental goals.
She said that Nigeria should build stronger and responsive institutions that could support infrastructure agenda of the government.
“We need to build the business in terms of products that meet specific needs of investors,” she said.
Ms. Oniha said that acceptance of the offer was an indication of the viability of the instrument as an investment option as well as a demonstration of utmost faith in the economy. She also commended the Federal Government for the policy support that led to the success of the initial offer.
The DMO boss said that it had been encouraged to introduce new instruments to aid government’s funding, saying investment experts are optimistic that with the issuance, a new instrument would have been introduced to Nigeria’s capital market. She said the new instrument would add to the variety of products available for domestic issuers and investors.
Investors in the offer, which closed on September 22, with a seven-year tenor, included pension funds, banks, fund managers and retail investors.
The ₦100 billion Sukuk bond issued by the Federal Government was oversubscribed by about ₦6 billion. The seven-year Sukuk attracted a subscription of ₦105.88 billion according to the DMO.
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